07 May , 2025 By : Debdeep Gupta
Shares of Tata Motors surged up to 4 percent to Rs 675 per share on May 7, emerging as the top Nifty 50 gainer after the company gave a consensus nod to demerge its commercial vehicle business. The development also came after the India-UK Free Trade Agreement was signed, reducing auto tariffs from over 100 percent to 10 percent.
So far in 2025, Tata Motors’ stock has declined by around 10 percent, underperforming the broader Nifty index, which has risen 2 percent during the same period. However, the stock has shown signs of recovery over the past month, climbing nearly 15 percent.
Tata Motors announced that its shareholders have given near-unanimous approval to the proposal of demerging the Commercial Vehicle business into a separate, listed entity. The resolution received an overwhelming 99.99 percent of the votes in favor. The company had initially shared its intention to demerge the CV division back in March 2024.
Following this development, all existing shareholders of Tata Motors will be entitled to receive one share in the newly formed commercial vehicle company for every share they currently hold in Tata Motors.
In addition to this, the India-UK Free Trade Agreement signed last evening is expected to have significant implications for the automotive sector. Under the agreement, import tariffs on automobiles will drop from over 100 percent to 10 percent under a specific quota. While details of the quota remain unclear, this change is expected to favor premium car brands.
This move could prove advantageous for Tata Motors, particularly its UK-based subsidiary Jaguar Land Rover (JLR), potentially boosting JLR’s sales in the Indian market due to the lower import costs.
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